Battle for Tokyo Goes Nuclear

Jan. 22 (Bloomberg) -- The smallest elections often have
the biggest repercussions. Japanese Prime Minister Shinzo Abe
might want to ponder that as he considers what went wrong in
Nago, Okinawa (population 62,000).

Abe’s Liberal Democratic Party failed to dislodge incumbent
Mayor Susumu Inamine in Sunday’s contest, putting Japan-U.S.
relations at risk. Inamine has pledged to block the relocation
of a U.S. air base to his district, something that Abe had
assured Washington was a done deal. Apparently not.

The question now is what the LDP’s setback in Nago says
about a Feb. 9 election in Tokyo, one that could topple a
central pillar of Abe’s economic program.

Morihiro Hosokawa, prime minister from 1993 to 1994, is
running for Tokyo governor, arguably the second-most influential
job in Japan. The LDP’s knives are out for him: Shintaro
Ishihara, Tokyo’s popular governor from 1999 to 2012, has flatly
declared Hosokawa isn’t qualified for the job.

The establishment’s real gripe with Hosokawa has less to do
with his credentials than his policies, which threaten Japan’s
nuclear-industrial complex -- the LDP’s political base. This
“nuclear village” is at the root of the cronyism, corruption
and inertia that continue to prolong Japan’s malaise and dent
its competitiveness.

Abe’s surrogates are trying to paint Hosokawa as some kind
of crazed Japanese Che Guevara who would drag the nation
backward with his green policies. But in Hosokawa’s corner
stands none other than Junichiro Koizumi, Abe’s political mentor
and the nation’s most celebrated economic reformer in decades --
hardly a Marxist.

In all the excitement over Abenomics and Tokyo hosting the
2020 Olympics, it’s easy to forget the nuclear-disaster zone 135
miles away. Radiation has been leaking from the crippled
reactors at Fukushima for going on three years now, and nuclear
sludge is contaminating groundwater and the Pacific Ocean. How
much? We don’t know. The hapless Tokyo Electric Power Co., which
owns the power plant, has consistently hedged the truth about
the disaster, enabled by the government. Abe’s new national
secrets bill ensures we will know even less.

Hosokawa and Koizumi are doing Japanese a favor by
highlighting the crisis. If the 2011 earthquake that damaged
Fukushima demonstrated anything, it’s that Japan’s 54 reactors
have no place in such a seismically active nation. The tragedy
also helped expose the nuclear village -- a network of power
companies, regulators, bureaucrats and researchers that holds
great sway over Japanese elections and media.

Just like Hosokawa, the two prime ministers prior to Abe,
Yoshihiko Noda and Naoto Kan, hail from the Democratic Party of
Japan and sought to rein in this pro-nuke cabal. Noda, for
example, pledged to phase out nuclear power by 2040. When the
LDP returned to power in December 2012, Abe’s first act was to
scrap that plan.

Why? It’s the easy road. Revitalizing a bloated, aging
economy is harder when energy costs are rising. The difficult
route would be to find an alternative to nuclear power. It would
also be the more lucrative one.

In October, Koizumi turned on Abe and the LDP and called
for a reactor-free Japan. The former prime minister has argued
that devising and selling alternatives to nuclear power could be
the ultimate growth industry. At the moment, Abe is traversing
the world hawking nuclear technology for Hitachi Ltd. and other
companies. But launching a new generation of renewable-energy
companies could create millions of jobs and unprecedented
wealth.

When it comes to energy efficiency and conservation, few
places can trump Japan. Why not harness those capabilities to
raise living standards? All Abe is doing is doubling down on the
last 20 years: pumping money into a tired economy, building more
bridges and highways, and bailing out Sony Corp. with a weak
yen.

Hosokawa and Koizumi are thinking bigger. It would be oddly
poetic for Japan -- the only country that has suffered a nuclear
attack -- to rid our planet of an energy source that from Three
Mile Island to Chernobyl to Fukushima has proven itself to be
anything but safe, clean or cheap.

Unless we can construct reactors out of rubber or elevate
them on huge shock absorbers out of the reach of temblors or
tsunamis, they shouldn’t be part of Japan’s future. Arguably,
the same holds true for India, Indonesia and Turkey -- places to
which Japan Inc. is trying to export its vulnerabilities. If
high-technology, hyper-conservative and rules-obsessed Japan
couldn’t avoid or contain Fukushima, what hope do far more
graft-prone political systems have? Even the prime minister’s
wife, Akie, wants her husband to stop these sales.

Abe’s party is circling the wagons to stop Hosokawa. BNP
Paribas SA says investors should sell their stock if he becomes
Tokyo governor. But I see this moment as an incredible
opportunity for Japan. Call me crazy.